Recent genome-wide association studies have shown that genetic polymorphisms in the IL28 (interferon-lambda) gene are highly associated with viral clearance and treatment response. Furthermore variations in the inosine triphosphate pyrophosphatase (ITPA) gene have also been closely linked to ribavirin-induced anemia in other GWAS studies. We are genotyping our patient populations to further explore this genetic linkage and understand the functional relationship of these associations. The function of type III IFNs in intrinsic antiviral immunity is poorly understood. We showed that HCV infection of primary human hepatocytes, in addition to upregulating type III IFNs leading to IFN-stimulated gene (ISG) induction, results in a much broader range of changes in gene expression. Type III IFN, in addition to upregulating ISGs with different kinetics, induces a distinct set of genes from type I IFN, potentially explaining the functional difference between the two types of IFNs. Chimpanzees undergoing experimental HCV infection demonstrated a prompt hepatic induction of IL28, associating with ISG upregulation, but minimal type I IFN induction. Analysis of liver biopsies from HCV-infected patients supported a close correlation among hepatic expression of IL28, ISGs, and treatment response, but not with type I IFNs. Our study demonstrates that HCV infection results predominantly in type III IFN induction in the liver via IRF3 and NF&#954;B-dependent pathways and the level of induction correlates with hepatic ISG levels and treatment response, thus providing a mechanistic explanation for the association between IL28, ISG levels and recovery from HCV infection as well as a potential therapeutic strategy for treatment non-responders. To further study the role of IL28 in hepatitis C, we analyzed IL28b genotypes and histologic disease progression using paired liver biopsies. Previous cross-sectional studies using liver biopsies of HCV patients have shown conflicting results. Patients with CHC with paired liver biopsies a minimum of 1 year apart from 2 cohorts (control arm of HALT-C trial, n=403;and untreated patients enrolled in a natural history study at the NIH, n=80) were genotyped for the rs12979860 SNP using TaqMan assay. Fibrosis was scored using the HAI (0-18) and Ishak (0-6) scales. The IL28b genotype was correlated with the initial biopsy and with progression between biopsies. Fibrosis progression was defined as a 2-point increase in Ishak score between biopsies (patients with cirrhosis were excluded from the paired analysis). Multiple logistic regression, controlling for study and time between biopsies, was used to identify variables associated fibrosis progression. 483 patients were included in the baseline and 273 in the paired biopsy analysis. (210 with a single biopsy were excluded). The median period between biopsies was 4 years. Mean age was 49 years, 67% were male and 73 % Caucasian. The distribution of IL28b genotypes was (CC: 15 %, CT: 58 % and TT: 27%). At the time of first liver biopsy, the distribution of Ishak score was 0: 6%, 1: 4%, 2: 8%, 3: 30%, 4: 17%, 5: 19% and 6: 15%. Patients with CC genotype had significantly higher portal inflammation and ALT levels compared to those with CT/TT (All p values <0.05). There was no association between IL28b genotype and Ishak score at initial biopsy. In the paired analysis, fibrosis progression was observed in 16% with genotype CC compared to 23% in those with genotypes CT/TT (P=NS). Mean change in portal inflammatory score was similar between CC and CT/TT genotypes. Factors associated with fibrosis progression in the model were higher alkaline phosphatase and lower platelets. In this paired liver biopsies cohort, IL28B CC genotype was associated with higher ALT levels and greater hepatic inflammation at the early stage. However later on there was no difference in Inflammation or fibrosis between genotype CC and CT/TT. This suggests that genotype CC is associated with a state of enhanced antiviral immune response that leads to viral clearance rather than fibrosis progression. HCV genotypes (gt) 2/3 respond to interferon (IFN) treatment better than gt 1. In gt 1, non-responder patients exhibit baseline activation of IFN-stimulated genes (ISGs) that renders them less responsive to exogenous IFN. It is not clear whether a differential activation of ISGs underlies the genotypic difference in responsiveness. We studied the hepatic expression of ISGs in patients with gt 1 or 2/3 before and after PEG-IFN injection. 26 untreated patients with chronic hepatitis C (17 with gt 1 and 9 with gt 2/3) were enrolled in a prospective trial with PEG-IFN alfa-2a and ribavirin in standard doses. 14 patients were randomized to a liver biopsy prior to starting treatment (9 with gt 1, 5 with gt 2/3) and 12 patients underwent a biopsy 6 hours after the first PEG-IFN injection (8 with gt 1, 4 with gt 2/3). Gene expression in biopsy specimens was measured using Affymetrix microarray and analyzed by ANOVA model for viral genotype. Significant gene induction was defined as &#8805;1.5 fold-change and p-value with FDR<0.05. IFN response was assessed using the 1st phase of viral decline. Overall 306 genes were affected by PEG-IFN (267 upregulated and 39 downregulated) in the study population. In pre-treatment biopsies, 63 of 306 ISGs differed significantly between gt 1 and 2/3. The 63 differentially expressed ISGs were on average 2.74-fold higher in gt 1 than gt2/3 and closely correlated with their degrees of induction by PEG-IFN (r=0.81, p<0.001 ). In the pre-treatment biopsies of gt 1 patients, the mean ISG levels of fast-responders were 2.82-fold and slow-responders 3.97-fold higher than those of gt 2/3 (p=0.002). In the biopsies after PEG-IFN injection, ISGs were induced 4.55-fold on average in gt 2/3 compared to pre-treatment biopsies while the induction was 2.73-fold in gt 1 (p<0.001). Gt 1 fast-responders had a 3.38-fold average induction by IFN, compared to 2.17-fold in gt 1 slow-responders (p<0.001). Hepatic ISG expression was lower in gt 2/3 compared to gt 1, with gt 1 fast-responders showing intermediate levels between gt 2/3 and gt 1 slow-responders. ISG induction by exogenous PEG-IFN was the greatest in gt 2/3 patients. These findings suggest that the differential responsiveness of viral genotypes to IFN is correlated to their ability to induce hepatic ISG expression.